Article 18

Marketing Research
Are we doomed forever to suffer the pangs of our self-delusional,
speculative bubbles and misguided ventures?
JERRY W. THOMAS

O WHAT HAVE WE LEARNED FROM THE

$500 billion to $1 trillion dot.com meltdown? Not to mention the billions squandered on speculative telecommunications
ventures, and the billions wasted on other
technologies in search of a market, any
market.
Okay, weve learned once again that we
cannot trust Wall Streetthey will sell us
anything we are stupid enough to buy.
Weve learned not to trust the financial
mediatheyll fan the speculative flames
to sell magazines and airtime. Weve
learned that you should not give millions
of dollars and free rein to college students.
Weve learned that diversification is a
good investment strategy. Weve learned
that arrogance is a prescription for disaster,
and weve learned that ignorance is frequently arrogances faithful companion.
But, what else did we learn? How many
of the dot.com business ventures were
based on solid marketing research? Virtually none. How many of the high-profile
telecommunications ventures were based
on sound marketing research? Very few.
How many of the other high-tech ventures
did their homework and conducted the basic marketing research necessary to accurately evaluate the market potential for
their ventures? Very few. How many of
these companies used marketing research
to refine their business concepts and tweak
their processes after the new ventures were
launched? Very few.
Would good research have prevented
all losses and saved these ventures? No, of
course not. But, it would have stopped the
launches of many of these ventures, and

dramatically reduced the number of failures among those that did go to market.
Marketing research, the application of
the scientific method to help solve business problems, includes experiments, surveys, product tests, advertising tests,
promotion tests, motivational research,
strategy research, customer satisfaction
monitoring, and other techniques.

Rules of Market Research

What types of research are most valuable, and when should you research? Here
are some general rules:
1. Strategy research is critical. Whats
the grand scheme? Where are you going?
Whats the optimal target market for your
business concept? What is the optimum
strategic positioning for your concept?
How will you differentiate your concept
from competitive businesses? Whats the
best product line for your concept? Whats
the best set of product features or capabilities? What is your pricing strategy? How
will you mute competitive counterattack?
Answers to these questions are essential to
the success of any business.
2. Product testing is the single most
important research youll ever do. Everyone tends to think their own inventions and
products are wonderful, much better than
those of competitors. Rarely is this selfdelusional assumption true. If you are not
regularly testing your products and services among your users, you dont know if
your products are any good or not.

Most of the time your customers will

not tell you your products are inferior
people are too polite, too concerned about
hurting your feelings. When you develop
new products, test them among potential
users to make sure they are good. You can
even use product testing to test the quality
of your products over time, and monitor
the threat posed by competitive products.
Product testing among your target audience is a never-ending quest for improvement.
3. Advertising pretesting is extremely
important. Much media advertising is
wasted because the advertising is simply
not effective. Advertising directors and
marketing directors and advertising agencies tend to fall in love with their creative
offspring, and are very resistant to subjecting their delicate art to the crucible of
consumer opinion. This is one of the greatest mistakes companies make: the failure
to test their advertising.
Advertising is simply too important to
trust creative decisions to ones advertising agency or to the penchants of a few executives. The only reliable jury is the
consumers who make up the target audience for your product. Operations research
evaluates and improves service levels and
service processes, as perceived by your
customers. What are key elements of perceived service? How can perceived service be improved? How can you recruit
better employees? How should your employees treat your customers? These questions can all be answered by marketing
research methods. A great product accompanied by poor support, delivered by surly

ANNUAL EDITIONS
employees, does not build a brand franchise.
4. Sales analysis. What is per capita
consumption of your product by state or by
country? What are your sales by channel or
distribution, by state? What are the trends
in your sales over the past three years, by
channel of distribution? Who is buying
your product, and who is not? What economic indices tend to correlate to your
sales data? Can you identify leading indicators among the published economic indices that might help you anticipate
conditions in your industry? Sales research
is extremely valuable.
5. Other types of research might be
valuable, depending upon your companys
needs, such as awareness and attitude surveys, brand image surveys, advertising
tracking, promotion testing, media-mix
evaluation, new products research, marketing optimization research, and customer
loyalty evaluation. Your marketing research should have a purpose. Do research
when you cant afford to be wrong on a decision, when the risks are great, when the
opportunities are big, or when you must
convince your management. Do research,
however, only when benefits exceed the
costs of research.
You might start the process by calling
companies in your area or industry that do
a lot of marketing research. Then, talk to

the candidate companies to determine

chemistry and fit to your needs.
6. Magic techniques. Exotic approaches. Revolutionary technology. Let
them experiment on your competitors.
Rule one: If you dont understand it, dont
buy it.
7. Guaranteed solutions. They know
they can solve your problem. They are certain they are right. They are in possession
of the Holy Grail. Let them bring salvation
and ultimate truth to your competitors.
Rule two: Dont do business with prophets
or other guru consultants.
8. Price variance. If the prices quoted
for research are extremely high, you
should be wary. Make sure you are getting
extra value for the extra price. Also be
wary of the companies that quote very low
prices. Never choose a research company
just because its prices are the lowest, and
risk making wrong decisions.

2. Set forth clear objectives. Tell the research company what decisions you wish
to make. Be sure the research firm understands your objectives.
3. Look in on the research while it is in
process. Listen to some of the telephone
interviews. Observe the focus groups or
depth interviews.
4. Once a study is completed, ask the
research company to present the results to
all of your key people in one room, at one
time. This is essential for two reasons:
first, many people dont read research reports; second, even if they do read them,
many people dont understand them. A live
presentation with all the key decisionmakers in one room allows the researcher
to explain the results, answer all questions,
and clear up any confusion.

Return on Research

If used wisely, research can help your

business avoid the next speculative meltdown. The future belongs to those who
make informed decisions based on objective, research-based realities.

How do you get the most from the research company you choose?
1. Build a relationship. Involve the research company in your business. The
more you work with one company, the better the job that company will do.

Jerry W. Thomas is president and CEO of

Decision Analyst, providers of marketing
research services and a world leader in
on-line marketing research. 817-640-6166
or www.decisionanalyst.com.

From Executive Excellence, November 2001, pp. 11-12. 2001 by Executive Excellence.